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Dear Sir,
In the P4 Mar/June 2016 paper, I understand that pontac pays 20% tax and Lirio 25% and thus an additional 5% would need to be payable when income is remitted. However there is the 8% withholding tax and I am confused as to how it works, shouldn’t it only be 5%? Please help
As you state, as far as profits are concerned 20% is charged in Pontac’s country, and then an extra 5% is charged in Lirio’s country.
The withholding tax is separate and is more like income tax / personal tax, in that the 8% is charged on the dividends. So Lirio only receives the cash of 92% and this tax is not offsettable or reclaimable.
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